Key Takeaways
- If you had freelance or side gig income in 2025, you report it on Schedule C. If your net profit is $400 or more, you also file Schedule SE for self-employment tax.
- Even if you never receive a 1099, your freelance or side gig income is still taxable.
- A practical starting point is setting aside 25% to 30% of income in taxes for freelancers and gig workers. (Higher earners often need more.)
- April 15, 2026 is both the deadline for your 2025 return and balance due and the first estimated-tax deadline for 2026 income.
You built your freelance business for freedom, but that independence also comes with an administrative trade-off: you are now responsible for your own tax withholding.
And if you haven’t been setting aside a percentage of every check, April 15 can feel like an ambush.
Let’s look at how we can structure your 2026 approach to your taxes, so you’re not caught off guard by a bill you didn’t see coming.
How do you report income as a freelancer?
For the 2025 tax year, if one of your Los Angeles clients paid you $600 or more by check, bank transfer, or cash, they should have sent you Form 1099-NEC by January 31, 2026.
For payment apps and third-party processors, if you receive more than $20,000 in payments and have more than 200 transactions, you’ll receive a 1099-K.
However, that doesn’t make income below these thresholds nontaxable. If you made $300 from a client and got no form, you still report the income on Schedule C.
If that net profit after deductions is $400 or more, you also file Schedule SE. This is where you calculate self-employment tax, which is how you pay the Social Security and Medicare tax that an employer would normally help cover.
From there, everything gets folded into your Form 1040. Your Schedule C profit gets added to other income like W-2 wages, interest, or investment income. After deductions, the IRS calculates your taxable income.
How much should freelancers set aside for taxes?
When one of your Culver City client pays you, none of that money has been withheld for taxes unless you set it aside yourself.
For most freelancers, I recommend a planning range of 25% to 30% of your income. If your net income is over $100,000, a more realistic target may be 35% to 40% (especially if you live in a state with high income tax).
Why the range? Because your bill is usually made up of three different layers:
- Self-employment tax: 15.3%
- Federal income tax: based on your total taxable income and tax bracket
- State and local taxes: depends on where you live
That’s why I see a lot of freelancers get surprised at tax time. Taxes for freelancers aren’t just one flat rate. There are several moving parts stacked together.
A simple habit helps: when income comes in, move a set percentage into a separate tax savings account right away.
When do freelancers have to pay taxes?
The big deadline you’re up against right now is April 15, 2026.
That’s the due date for your 2025 tax filing and for paying any remaining tax you owe for 2025.
Of course, you can file an extension until October 15, 2026, but that only extends the filing deadline. Not the payment deadline.
If you owe for 2025, the IRS still expects payment by April 15, 2026.
You also need to have estimated taxes on your radar for 2026. The IRS wants tax paid during the year, not all at once, the following spring.
The 2026 estimated tax schedule is:
- Q1: January 1 to March 31 → payment due April 15, 2026
- Q2: April 1 to May 31 → payment due June 15, 2026
- Q3: June 1 to August 31 → payment due September 15, 2026
- Q4: September 1 to December 31 → payment due January 15, 2027
April 15 is the day that tends to sting the most, because it’s a double payment day. Your final 2025 balance and your first 2026 estimated payment are due at the same time (however, you can pay earlier if you want).
But how do you know how much you should pay the IRS each quarter?
To avoid underpayment penalties, the IRS generally gives you a safe harbor. You usually will not be penalized if you pay 90% of your current-year tax OR 100% of your prior-year tax by the April tax deadline.
So, just calculate that number and divide it into 4 quarterly payments throughout the year.
When you go to pay, you can use IRS Direct Pay or EFTPS. Just make sure you choose Estimated Tax and the correct tax year so the payment gets applied to the right bucket.
What expenses can freelancers and gig workers write off?
I hear the phrase “write-off” get thrown around a lot when talking about taxes for freelancers and gig workers, but the standard is pretty simple: the expense must be ordinary and necessary for your business.
A few of the big ones that lower your income tax and self-employment tax:
- Home office: If part of your Culver City home is used exclusively for business, you may qualify
- Simplified method: $5 per square foot, up to 300 square feet
- Actual method: deduct the business share of rent, mortgage interest, insurance, utilities, and repairs
- Simplified method: $5 per square foot, up to 300 square feet
- Mileage: 70 cents per mile for 2025, plus business parking and tolls
- Equipment: Computers, tools, and other business equipment may be deductible, including possible year-one expensing under Section 179
Then there are the steady operating expenses that keep the business running:
- Marketing and advertising
- Website hosting and software subscriptions
- Education that improves skills in your current field
- Professional fees for tax professionals (hey there), lawyers, or consultants
And don’t forget about the Qualified Business Income deduction and the qualified tip deduction. I can help you determine your eligibility for these deductions.
Also, self-employed health insurance premiums and retirement contributions to accounts like a Solo 401(k) or SEP IRA can help lower your taxable income if you qualify.
This is where good tax prep becomes more than data entry. A tax pro knows how to find deductions you may not have considered and decode the fine print to see if you’re eligible.
What happens if you don’t report your freelance or gig income?
When a client sends you a 1099-NEC, they also send that information to the IRS. The IRS uses matching systems to compare what third parties reported against what you put on your return.
If the numbers don’t line up, that triggers a CP2000 notice.
It doesn’t mean a full-blown audit, but it is an official notice telling you the IRS believes income was left off the return.
And the penalties can include more than just the original tax you would’ve owed:
- Interest, starting from the original due date
- An accuracy-related penalty of 20% of the underpaid tax in many negligence cases
- A civil fraud penalty of 75% of the underpayment if the IRS can prove intentional evasion
And it isn’t just 1099 income that creates risk. Even cash income with no form attached is still taxable. If your bank deposits, spending patterns, or large purchases do not make sense compared with the income on the return, that raises a red flag for the IRS.
The IRS usually has 3 years to audit a return, but that can become 6 years if you leave off more than 25% of your gross income. And if fraud is involved, or no return is filed, the exposure can last much longer.
I always tell my clients, the cleanest approach is still the boring one: keep good records, report all your income, and handle your tax bill through proactive planning.
Final thoughts
As you can tell, there’s a whole lot that goes into doing your freelancer taxes the right way.
But I, for one, would hate to see your tax obligations get in the way of the amazing work you’re doing.
Let me help get your taxes done this tax season AND keep you compliant all year round:
FAQs
“Do you have to pay tax as a freelancer?”
Yes, if your net self-employment earnings are $400 or more, you must file a tax return and pay self-employment taxes. Unlike traditional employees, freelancers are responsible for both the employer and employee portions of Social Security and Medicare. Failure to report this income can result in IRS penalties and interest.
“How much tax do I pay on freelance income?”
Freelancers typically pay a 15.3% self-employment tax on 92.35% of their net earnings. Additionally, you owe federal and state income taxes based on your total annual income and tax bracket.
“How should freelancers pay taxes?”
Freelancers should make quarterly estimated tax payments using Form 1040-ES if they expect to owe $1,000 or more. These payments are generally due in April, June, September, and January. Staying current with these payments helps you avoid underpayment penalties and a large year-end bill.
“How do you report freelance income if you don’t receive a 1099?”
You must report all freelance income on Schedule C, even if you did not receive a Form 1099-NEC or 1099-K. The IRS requires you to track and disclose all gross receipts, regardless of the amount. Maintaining accurate records like invoices and bank statements is essential for documenting this non-1099 income.
“How do you file taxes when you freelance on the side but also have a W-2?”
When balancing both, you file a single Form 1040 and attach Schedule C to report your freelance business activity. Your total tax is based on your combined income, but your W-2 withholdings can help offset what you owe on your side hustle.
“How to can I reduce my taxes as a freelancer?”
Maximize your savings by deducting eligible business expenses like home office costs, equipment, and marketing. You can also deduct half of your self-employment tax and 100% of your health insurance premiums. Contributing to a SEP IRA or Solo 401(k) is another powerful way to lower your taxable income while saving for the future.